Need Advice- Multifamily 22 units apartment building

[Deepak Sukhija]

I currently own two multifamily units and am looking to take the first step in buying 22 unit apartment building.  Here is the deal info:-

Apartment Budling with 22 units. Operating Expenses includes taxes, vacancy, utilities, insurance, maintenance, and management fee. There are long term tenants and 9 units have been renovated that bring additional rent. There is potential of renovating other units and increasing the rents.

Asking Price 6,795,000

Gross Rent 611,436

Operating Expenses 233,142

Additional Income 35,800

Net Income 414,094

Questions-

• How do I find a multifamily lender who can help me fund this purchase?
• What some ideal way to find investors to fund this deal?
• What should be the ideal duration of the loan?
• What would be ideal down payment to secure the loan?

[Evan Polaski]

@Deepak Sukhija, I would start with talking to loan brokers.  Berkadia, CBRE, Cushman all have capital markets teams that can help with loan products of this size.  

Investors are almost always the biggest challenge for any group, new or seasoned, but especially newer investors.  This is networking, tapping your current list of friends, family, co-workers, other real estate investors, etc.

Ideal duration depends on business plan: I, personally, am a fan of long-term fixed rate loans. But these do have drawbacks, typically in lower LTV, prepayment penalties, etc. A lot of investors used short-term bridge loans in 2021/2022, which are burning a lot of investors now.

Downpayment all depends on lender. More down means lower monthly payment means more cash flow. Higher leverage means (hopefully) a better return on your invested capital. But it is more than down payment, it is also any reserves. If you plan on renovating the other 13 units, how will you pay for that? Some lenders will only lend with that reserve funded, in addition to down payment, as the more you boost NOI, the more secure their loan becomes.